Ireland’s economy will continue to grow at the fastest rate in the EU this year, a performance the bloc’s economics chief has called “brilliant and balanced”.

According to economic forecasts released Thursday by the European Commission, Ireland’s economy will expand by 4.5pc this year, more than twice the EU average.

The strong performance is based on increased consumer spending and a boost in investment, while net exports - the difference between exports and imports - contracted last year and will remain close to zero next year, the EU predicts.

GDP growth was 6.9pc in 2015, the Commission said, an upward revision of almost an entire percentage point on its November forecast.

However, growth will slow to 3.5pc in 2017, with Luxembourg and Romania overtaking Ireland as the fastest-growing economies in the bloc.

The EU’s economics chief said the slowdown meant Irish growth was becoming more “sustainable”, dampening fears of another bubble bursting.

“This country, therefore, continues to perform well and is converging towards a more sustainable growth rate, while still remaining high,” said Pierre Moscovici, EU commissioner for economic affairs and tax.

“But it’s clear, it must avoid figures that could lead to the fear that some bubbles would be recreated, and that’s clear that everybody must avoid that, so the figure - 4.5pc - is as well brilliant and balanced,” he told reporters in Brussels Thursday.

Job creation has continued in Ireland, the Commission said, with unemployment expected to fall from 9.4pc in 2015 to 8.5pc this year and 7.8pc next year - well below the EU and euro area average.

The budget deficit will drop from 1.8pc of GDP in 2015 to 1.3pc of GDP this year on the back of a higher than expected tax take at the end of last year, falling to 0.8pc of GDP in 2017, the Commission predicts.

Irish inflation will remain close to the euro area average, rising from zero last year to 0.6pc this year and 1.4pc next year.